Global stocks up on Ja­panese, Euro­pean data

Kuwait Times - - BUSINESS -

TOKYO: Stock markets had an up­beat start to the week af­ter stronger-than-ex­pected eco­nomic data from Ja­pan and the eu­ro­zone. At­ten­tion is likely to fo­cus this week on Fri­day’s re­lease of US growth data, as in­vestors adapt to ex­pec­ta­tions the Fed­eral Re­serve will hike in­ter­est rates in De­cem­ber.

Ger­many’s DAX gained 0.9 per­cent to 10,808 and France’s CAC40 was up 0.8 per­cent to 4,572. The FTSE 100 of Bri­tain rose 0.2 per­cent to 7,031. US shares looked set to rise, with Dow and S&P 500 fu­tures up 0.4 per­cent. Ja­pan posted a trade sur­plus of 498.3 bil­lion yen ($4.8 bil­lion) in Septem­ber, com­pared with a deficit of 18.7 bil- lion yen in Au­gust. While ex­ports fell 6.9 per­cent from a year ear­lier, pulled lower by ane­mic demand for au­tos and ma­chin­ery, that was bet­ter than the fore­casts for a de­cline of more than 10 per­cent.

Mean­while, a pre­lim­i­nary sur­vey of fac­tory man­agers showed a fifth straight month of im­prove­ment in man­u­fac­tur­ing sen­ti­ment and the mea­sure for out­put rose for the first time since Jan­uary. The bond yields at which gov­ern­ments in Europe’s debt-rid­den south­ern coun­tries fund their bud­get gaps were also sharply lower, 10-year bond yields fall­ing 5 ba­sis points in Spain and 15 in Por­tu­gal af­ter a rat­ings de­ci­sion seen as cru­cial to keep­ing the Euro­pean Cen­tral Bank buy­ing Lis­bon’s bonds. A 2.5-per­cent rise for Euro­pean bank­ing stocks and strong read­ings from Ger­man and eu­ro­zone pur­chas­ing man­agers helped the con­ti­nent’s ma­jor stock markets all gain ro­bustly.

Spain edges up

But the IBEX out­stripped its Ger­man and French equiv­a­lents with a 1.4 per­cent rise. Spain’s con­ser­va­tive leader Mar­i­ano Ra­joy was on course to se­cure a sec­ond term in power for his Peo­ple’s Party (PP) af­ter the So­cial­ists agreed to ab­stain in a con­fi­dence vote this week, end­ing an im­passe stretch­ing back to elec­tions last De­cem­ber. “In the very short term, the for­ma­tion of a govern­ment is good news for Span­ish spreads,” Rabobank an­a­lysts said in a morn­ing note. “How­ever, in the medium term Spain will still be left with a mi­nor­ity govern­ment that is likely to face an up­hill strug­gle to pass any leg­is­la­tion.”

Wall Street was set to open higher , push­ing in­dexes back to­wards all-time highs. Europe’s have re­cov­ered from three­year lows hit in Fe­bru­ary as the US econ­omy im­proves and cen­tral banks glob­ally con­tinue to pump cash into the sys­tem.


Po­lit­i­cal risks have moved to the top of the agenda, with Bri­tain’s vote to leave the Euro­pean Union upping the stakes fur­ther for Ger­man and French elec­tions next year while of­fer­ing in­vest­ment op­por­tu­ni­ties through a sharp weak­en­ing of the pound. But the sur­feit of cash sit­ting in multi­na­tion­als’ bank ac­counts is also be­gin­ning to show up in some ma­jor merger and ac­qui­si­tion deals, with AT&T Inc’s $85.4 bil­lion deal to buy Time Warner Inc among the lat­est.

“We have seen a stronger open this morn­ing af­ter more cor­po­rate ac­tiv­ity in the US, which will help the me­dia names in the ses­sion,” said Atif Latif, di­rec­tor of trad­ing at Guardian Stock­bro­kers in Lon­don.

“Also French Con­nec­tion pri­vate eq­uity talk is help­ing M&A ac­tiv­ity (and) this will be­come a theme given the ad­van­tages of the FX weak­ness al­low­ing more UK listed names to be­come at­trac­tive tar­gets.” The US growth fig­ures due Fri­day for the July-Septem­ber quar­ter will no doubt be “the high­light of the week,” Chris We­ston of IG said in a commentary. “Keep in mind that growth has av­er­aged around 1 per­cent in the past three quar­ters, so a snap back to the con­sen­sus es­ti­mate of 2.5 per­cent would be wel­comed.”

Asian stocks also gained af­ter a slug­gish end to last week on Wall Street while China’s yuan cur­rency neared 6.80 per dol­lar, lev­els not seen in six years and which Beijing in­ter­vened heav­ily to de­fend in Jan­uary. MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan inched up 0.2 per­cent. Ja­pan’s Nikkei moved in a tight range and was last up 0.2 per­cent while Shang­hai out­per­formed, ris­ing over 1 per­cent.

The Shang­hai Com­pos­ite in­dex led gains, ad­ding 1.2 per­cent to 3,128.25, while Hong Kong’s Hang Seng jumped 1 per­cent to 23,604.08. They were bol­stered by re­ports that China’s bank­ing watch­dog called for stricter over­sight of the real es­tate mar­ket and con­trols on risks re­lated to in­dus­tries with ex­cess ca­pac­ity and lo­cal govern­ment debts.

Ja­pan’s Nikkei 225 rose 0.3 per­cent to 17,234.42. South Korea’s Kospi climbed 0.7 per­cent to 2,047.74 and In­dia’s Sen­sex ad­vanced 0.4 per­cent to 28,191.88. Aus­tralia’s S&P ASX 200 fell 0.4 per­cent to 5,408.50. — Agen­cies

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